Daily Brief TMT/Internet: Tencent, NEC Corp, Micron Technology, Reddit , WT Microelectronics, Coforge, Sunpower Corp, FD Technologies and more

• In 4Q23, Tencent experienced a one-digit growth, but its margin improved significantly.
• We believe Tencent’s social networks will stop shrinking after the company sold movie assets to China Literature.
• We believe the stock will have an upside of 37.5% and a price target of HK$397 for year end 2024. Buy.

• Tencent (700 HK) reported 4Q results today. Both revenues and OP increased 7.1% and 42.0% YoY, however, both revenue and OP fell below consensus estimates.
• The company also announced an increase to 2023 dividends and more than doublethe size of the company’s share buyback in 2024 compared to 2023.
• We expect Internet VAS to grow at single-digits in 2024, however, high-margin new products to help boost margins in 2024.

• CEO Jensen Huang’s keynote address at Nvidia’s GTC event on March 18 was a reminder that generative AI is about building secure and reliable systems, not chatting up the future.
• NEC has spent three years developing its own AI supercomputer, creating the best performing Japanese-language large language model (LLM), and testing new AI products in-house before delivering them to clients.
• The introduction of generative AI and LLMs into business- and industry-specific solutions should provide meaningful additions to NEC’s telecom services, social infrastructure, aerospace and national security related businesses. 

• Earlier expectation on Micron will have rooms to raise becoming a reality, largely driven by over 30% q/q NAND bit price jump for storage business in 1Q24.
• 10ppts stronger 2Q24 sales guidance and 3-6ppts higher gross margin guidance are driving free cash flow improvement.
• AI server, PC, and smartphone driving DRAM bit demand and HBM3e/HBM4 and 1-gamma EUV DRAM slowing bit supply growth both are positive except MOI remains 15% above 5 years average. 

• Reddit (RDDT US) is looking to raise up to US$750m in its US IPO.
• Reddit is an online social media platform where users are able to join communities, engage in conversations, research, exchange goods and services as well as create new communities.
• In our previous note, we talked about the company’s historical performance. In this note, we share our quick thoughts on valuation.

• WT Microelectronics (3036 TT) is looking to raise up to US$444m in its upcoming global depository receipts (GDRs) offering.
• WT Microelectronics recently announced its board’s resolution to issue between 68-85m new shares in the form of GDRs, with the use of proceeds geared towards purchasing of raw materials overseas.
• Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

• Coforge (COFORGE IN) is looking to raise around US$386m in its upcoming qualified institutional placement (QIP).
• In an announcement released on Saturday, Coforge had mentioned its board’s approval to raise up to INR32bn via a QIP. Since then, the shares have corrected 9.1%.
• The deal would be a large one to digest at 14 days of three month ADV. That being said, the company’s last selldown did well.

• Micron Technology reported very positive revenues this quarter and a return to profitability
• A large part of this stems from the impact that HBM demand is constraining production of standard DDR5 DRAM, driving it into a shortage
• This is good news for Micron and its DRAM competitors Samsung and SK hynix

• Sunpower is facing a severe liquidity problem and may need to raise $100-300 million before January to avoid bankruptcy
• The company operates as a wholesaler of residential retail solar panel systems, providing equipment to third-party developers or selling directly to residential customers
• Trade credit tightening terms and potential customer hesitation due to financial instability are contributing to Sunpower’s uncertain future

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• FD Technologies is a UK-based software and services company with a market cap of £300 million.
• The company has three segments, with its KX segment being the fastest growing, accounting for around 26% of its revenue.
• KX provides a time-series database solution that is expanding beyond the finance industry, with ARR expected to reach £80 million by FY24.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.